E-Commerce Law: Balancing Economic Interest and Consumer Rights
In light of the radical shift the world is witnessing toward digital and electronic transactions, and the increasing reliance on e-commerce as a primary means of commercial exchange, it has become imperative to establish a legal framework ensuring the security of digital transactions, while balancing the economic interests and consumer rights. With fraudulent behaviour threatening the sector's credibility, an urgent need arises to ensure transparency, fairness, preserving the rights of all parties, and protecting the foundations of the economic system. Various comparative jurisdictions have taken the initiative to enact relevant laws, whether through regulating digital transactions within a comprehensive framework, or through specific laws regulating e-commerce, such as the UAE.
In an effort to build an advanced digital future that guarantees the rights of all and supports sustainable economic growth, Palestine has been no exception, adopting a specific law regulating e-commerce independently (hereinafter referred to as “draft law”). The Palestinian e-commerce draft has embedded three-pillar objectives; consumer protection against fraudulent behavior, supporting investment and innovation in the private sector, and enhancing the governmental role in achieving sustainable economic development.
E-commerce Registry
The draft law establishes an electronic registry that serves as the backbone for data preservation and the safeguards necessary to regulate the digital commercial space. Generally, and with the exception of trading in immovable assets and objects, owners of e-commerce shops, or e-providers, are required to register their stores and data with the Ministry of National Economy’s Registry prior to initiating any e-commerce activity. The registration process requires providing a reliable address for the online stores, and the adoption of a clear policy approved by the Ministry regulating pricing, warranty, maintenance, and customer personal data protection policies. The e-provider is further responsible for information security and data protection throughout the collection of consumers’ data, and obtaining the necessary approvals as required by the Personal Data Protection draft law.
As the draft law does not yet set a list of official fees, the Ministry’s responsibility for collecting the said fee and the system's effectiveness will be challenged and the registration rates may be hindered at this stage.
E-commerce, Advertising and Contracting
In regulating electronic contracts, the draft law specifies the basic information required to ensure the integrity and transparency of electronic transactions. Such information consists of the store's name, product details, pricing, payment terms, and other necessary requirements that safeguard the rights of all parties involved. This further places great importance on regulating electronic advertisements, emphasizing the need for clarity and prominent display of the store’s name and registration number. It also requires a clear and comprehensive explanation of the products or services offered, as well as specifying prices and expiration dates to ensure the integrity and credibility of information. The legislator has ensured that contracts and advertisements are free of fraud or misleading information, in accordance with applicable consumer protection principles. The draft law prohibits the use of counterfeit or unlicensed trademarks in advertisements, and prohibits the sale or promotion of products that violate intellectual or industrial property rights. This step reflects the legislation's commitment to strengthening the principles of intellectual property protection, enhancing trust, and protecting the rights of brand owners, investors, and consumers.
Taxation
The issue of tax justice within the framework of the draft law raises fundamental questions related to the principle of “Equality between traditional and e-commerce”. The absence of a clear legal framework regulating e-commerce previously cast a shadow of ambiguity over tax responsibilities imposed on digital transactions. Accordingly, the draft law requires e-providers to issue tax invoices for all transactions relating to products, services, or transportation fees, thus subjecting e-commerce to the same tax standards applied to traditional commercial establishments.
This measure raises profound legal and economic controversy, and raises a number of questions on whether imposing tax invoices on all online sales and purchases is considered fair? Is the goal to achieve equality between traditional and e-commerce providers? Can start-up and small e-commerce businesses be exempted from taxes, or subject to reduced taxes? If so, what is the criteria to distinguish small e-commerce businesses? How does imposing taxes affect online store owners, specifically in terms of evading taxes or registration?
Complaints and Penalties
The draft law included a dedicated communication channel to receive complaints with the aim of strengthening the mechanisms for monitoring the sector’s compliance. It included three types of penalties; the immediate closure of online stores, a procedure that is supposed to require prior coordination with the Ministry of Communications and Information Technology, despite the draft law referencing “Competent authorities", which raises questions about the clarity and implementation of this decision. The closure of the store is further considered to be a relevantly harsh measure taken against e-stores, in case of minor violations, and without prior notice or warning. The other two penalties are imprisonment for up to three years, and a fine of up to four thousand Jordanian Dinars, reflecting the seriousness of ensuring compliance with the draft law’s provisions.
Enforcement and Challenges
As the application of the draft law is limited to the country's borders, this may limit achieving the draft law objectives. The nature of e-commerce activities ensures that many transactions occur outside the country despite being initiated within its borders. This places an unfair burden on national citizens and investors and may encourage stakeholders to evade compliance by hosting their websites on external servers. Other legislations have addressed this issue by imposing the law's application on everyone who conducts commercial activities via technology, whether within the country or abroad, including payment methods and logistics services related to e-commerce. Therefore, it is imperative to expand the scope of legislation to include all e-commerce activities, and to establish a comprehensive legal framework that keeps pace with technological developments, ensures fairness and transparency, protects the interests of the country and investors, and protects the digital business environment from manipulation and abuse.
Finally, it is imperative to address the challenges of implementing the draft law and rectifying the situation. The regime must legislate a mechanism for the practical application of the law and develop practical plans for its implementation, rather than burdening both merchants and consumers with bureaucratic regulations that restrict commercial activity.
